Trans-Pacific View creator Mercy Kuo frequently engages subject-matter consultants, coverage practitioners and strategic thinkers throughout the globe for his or her various insights into U.S. Asia coverage. This dialog with Dr. Nguyen Khac Giang – visiting fellow on the Iseas-Yusof Ishak Institute in Singapore – is the 455th in “The Trans-Pacific View Perception Collection.”
Clarify how Vietnam has benefitted from U.S.-China commerce tensions.
Vietnam has deftly transformed U.S.-China tensions into financial alternative. Sustaining cordial relations with each powers, it grew to become the popular vacation spot for producers searching for shelter from tariffs and instability, notably in electronics and excessive expertise. International giants like Apple, Samsung and Intel have considerably expanded their Vietnamese operations since 2018 – the beginning of the commerce warfare.
American tariffs on Chinese language items have concurrently boosted demand for Vietnamese exports, which regularly function direct substitutes for newly costly Chinese language merchandise. This demand surge, coupled with organically strengthening financial ties with america, explains Vietnam’s exceptional export progress. Vietnamese shipments to america have practically tripled since 2017 to almost $140 billion in 2024.
These developments have cemented Vietnam’s place as an important hyperlink in world provide chains, demonstrating the nation’s adroit financial diplomacy amid intensifying great-power competitors. The nation is among the many greatest financial performers in Asia previously few years.
Study how rising Chinese language funding and provide chains in Vietnam may make the nation weak to U.S. tariffs.
China stays Vietnam’s largest import market, offering roughly half of all inputs for Vietnamese producers. Merely put, Vietnam’s manufacturing sector relies upon closely on Chinese language suppliers, making financial decoupling nearly inconceivable. Bilateral financial ties have additional strengthened because the commerce warfare started, as producers – together with Chinese language corporations – proceed selecting Vietnam as the first vacation spot for his or her China plus one technique.
As manufacturing shifts throughout the border into Vietnam, its commerce deficit with China has widened conspicuously. This rising imbalance, juxtaposed in opposition to Vietnam’s substantial commerce surplus with america, invitations scrutiny – notably in Washington – that Chinese language items could also be circumventing tariffs by Vietnamese transshipment. Whereas rigorous research, together with notable analysis by Harvard Business School, have largely debunked allegations of systematic tariff evasion, notion regularly trumps proof in American commerce coverage underneath the Trump administration.
Subsequently, regardless of factual reassurances, Vietnam stays weak to punitive U.S. commerce measures – that are seemingly triggered extra by impressions than actuality. This vulnerability highlights a central threat embedded in Vietnam’s intricate financial relationship with its northern neighbor.
Determine Hanoi’s leverage factors in mitigating dangers of Vietnam’s commerce imbalance with america.
Hanoi holds a number of strategic playing cards to mitigate the dangers related to its commerce imbalance with america.
First, Vietnam has cultivated a realistic, transactional strategy with the Trump administration. It has provided the Trump Group a possibility to develop a $1.5 billion golf advanced in Hung Yen Province – tellingly, the hometown of Vietnam’s high chief, To Lam. Instantly following the U.S. election, Vietnam’s wealthiest businesswoman and Vietjet proprietor visited Mar-a-Lago, committing to buy 100 Boeing plane at Trump’s suggestion. Different Vietnamese conglomerates like Vingroup have equally pledged expanded American investments. These business initiatives have mollified American considerations by demonstrating reciprocal financial engagement, evident in current high-level commerce discussions between Vietnamese Minister of Trade and Commerce Nguyen Hong Dien and U.S. Commerce Consultant (USTR) Jamieson L. Greer.
Second, Hanoi can leverage its geopolitical worth as an important “swing state” in America’s broader Indo-Pacific technique. As the good energy competitors intensifies, Washington will more and more need Hanoi on its facet – or on the very least, guarantee it doesn’t drift nearer to Beijing.
Lastly, Vietnam’s constructive relationship with Beijing can present Washington with discreet channels for backdoor diplomacy – a useful asset amid deteriorating U.S.-China relations. Vietnam’s nuanced understanding of Chinese language strategic considering may also supply the U.S. insights into its principal world competitor.
Consider Hanoi’s effectiveness in balancing U.S.-China strategic competitors for Vietnam’s benefit.
Hanoi has demonstrated exceptional dexterity in navigating U.S.-China competitors since 2018. By capitalizing on commerce tensions, Vietnam has secured substantial financial dividends –attracting vital international funding and strengthening its place in world provide chains. Diplomatically, its pragmatic engagement with Washington has helped counterbalance China’s regional affect. On the similar time, Hanoi’s skillful maneuvering, exemplified by high-profile business agreements, has shielded it from punitive U.S. commerce measures regardless of rising bilateral commerce imbalances.
But, vulnerabilities persist. Economically, Vietnam’s heavy dependence on Chinese language inputs and widening commerce deficit with Beijing expose it to accusations of tariff circumvention, probably triggering U.S. retaliation. Geopolitically, intensifying superpower competitors will increase the danger of regional conflicts, whether or not within the South China Sea or the Taiwan Strait. Vietnam’s collateral injury will probably be monumental in both state of affairs.
Assess Hanoi’s priorities in managing U.S.- Vietnam relations within the Trump period.
Within the second Trump period, Hanoi’s administration of U.S.-Vietnam relations continues to prioritize stability, pragmatism, and strategic warning. Initially, Hanoi will search to keep away from changing into a goal of punitive American tariffs by actively demonstrating goodwill – highlighted by large-scale business transactions, elevated Vietnamese funding into the American economic system, and harder acts in opposition to any indicators of unlawful transshipment.
Concurrently, Hanoi will place itself as an indispensable accomplice in Washington’s broader geopolitical technique, rigorously leveraging its significance within the American community with out upsetting Beijing. Hanoi goals to maintain the U.S. sufficiently shut to assist counterbalance China, but not so shut as to create the impression in Beijing that it’s “ganging up” in opposition to China.
In the end, Hanoi goals at maximizing financial and safety features whereas avoiding being entangled in America’s turbulent politics and its intensifying competitors with China.
